Estonia's Versobank banned in Latvia

The board of the Financial and Capital Market Commission (FKTK), which is Latvia's finance regulator, has banned Estonia's Versobank from providing financial services in Latvia. 

The bank is banned from attracting new customers in the territory of Latvia and has been asked to terminate contracts with its current customers too, FKTK spokeswoman Agnese Licite told LETA Wednesday. 

"The FKTK Board has decided to prohibit Versobank AS from providing any financial services in Latvia, to ensure the development and stability of the financial and capital markets as well as to enhance the protection of the interests of investors and depositors that use financial services. FKTK is of the opinion that the activities of Versobank AS pose a threat to the credit institution sector, reputation and interests of customers," a statement by FKTK said. 

According to the FKTK, Versobank was banned from providing financial services in Latvia as it had been violating procedures stipulated by Latvia's credit law, namely over the way a credit institution registered in another EU member state may launch cross-border activities.

The regulator found Versobank has continuously provided financial services through a permanent physical presence in Latvia, even though the bank was only allowed to operate without a physical presence under the freedom to provide services.

In accordance with the Credit Institution Law if the FKTK rules that a credit institution registered in another member state, which provides financial services without opening a branch, performs activities that are in contradiction to the laws of Latvia, it shall without delay request that the credit institution terminate such activities.

If a credit institution does not terminate the activities that are in contradiction to the laws of Latvia, the FKTK shall inform the relevant member state's supervisor.

The FKTK has decided to prohibit Versobank from providing any financial services in Latvia, so as to ensure the development and stability of the financial and capital markets as well as to enhance the protection of the interests of investors and depositors that use financial services.

Versobank is a credit institution authorized in Estonia, whose activities are subject to supervision of the Estonian Financial Supervision Authority (Finansinspektsioon).

The Finansinspektsioon announced Wednesday that Versobank had previously claimed that it is not offering unauthorized services in Latvia.

The Estonian Financial Supervision Authority told LETA that it is cooperating with its Latvian colleagues in the investigation against Versobank's activities in Latvia, as well as continues to monitor the bank's activities in Estonia.

In late June TV3 television reported that the State Police had searched a Versobank branch in Rīga as part of an investigation over money laundering. 

Versobank's branch in Latvia was closed this year. It operated from October 2013 to March 2016.

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